SAIC Reports Mixed Q3 Results, Beats on Adjusted EPS Despite Revenue Decline
Science Applications International Corp. (NASDAQ:SAIC) announced financial results for its fiscal third quarter ended October 31, 2025, delivering a performance characterized by a top-line contraction but stronger-than-expected profitability on an adjusted basis. The government technology integrator's results and updated guidance have elicited a positive initial market reaction, with shares trading significantly higher in pre-market activity.
Quarterly Performance vs. Estimates
The company's third-quarter revenue of $1.87 billion represented a 5.6% decline compared to the same period last year. This figure came in slightly below the consensus analyst estimate of approximately $1.93 billion. The company attributed the decrease primarily to the ramp-down of existing contracts, contract completions, and a roughly $16 million headwind from a government shutdown.
While revenue missed expectations, SAIC's profitability on a non-GAAP basis surpassed forecasts. Key metrics include:
- Adjusted Diluted EPS: Reported at $2.58, significantly above the analyst consensus estimate of $2.19.
- Adjusted EBITDA: Reached $185 million, representing a margin of 9.9% of revenues.
- Net Income (GAAP): Was $78 million, or $1.69 per diluted share.
The outperformance on the bottom line was supported by sound program execution and a reduced share count, with weighted-average diluted shares outstanding falling to 46.1 million from 49.8 million a year ago.
Market Reaction and Capital Deployment
The market's focus appears to be on the earnings beat and a robust outlook for cash generation. Following the earnings release, SAIC's stock was up approximately 5.1% in pre-market trading. This positive movement contrasts with the stock's performance over the past month, which had seen a decline of about 4.3%.
The company's capital allocation strategy remains centered on returning value to shareholders. During the quarter, SAIC deployed $120 million, comprising:
- $94 million in share repurchases.
- $17 million in cash dividends.
Subsequent to quarter-end, the board declared a quarterly cash dividend of $0.37 per share, payable in late January 2026.
Updated Guidance and Future Outlook
Management provided an updated outlook for the full 2026 fiscal year, raising guidance on key profitability metrics while maintaining a steady view on revenue.
| Metric | Current FY2026 Guidance | Prior FY2026 Guidance | | :--- | :--- | :--- | | Revenue | $7.275B - $7.325B | $7.250B - $7.325B | | Adjusted EBITDA | Approximately $695M | $680M - $690M | | Adjusted Diluted EPS | $9.80 - $10.00 | $9.40 - $9.60 | | Free Cash Flow | >$550M | >$550M |
The midpoint of the new revenue guidance range, approximately $7.3 billion, aligns closely with the provided analyst sales estimate of $7.48 billion for the full year. The more notable increase comes in the adjusted EPS forecast, where the new range's midpoint of $9.90 is well above the prior range and suggests confidence in sustained margin performance.
Operational Highlights and Backlog
A significant bright spot in the report was the company's booking activity. SAIC reported net bookings of $2.2 billion for the quarter, yielding a book-to-bill ratio of 1.2. Year-to-date, net bookings stand at $7.2 billion, for a book-to-bill of 1.3. This indicates the company is winning new work faster than it is burning through existing contracts, supporting future revenue. Total estimated backlog at quarter-end was approximately $23.8 billion, of which $3.8 billion is funded.
Notable new awards during the quarter included a $1.4 billion task order with the U.S. Air Force for the Collaborative Operations for Battlespace Resilient Architecture (COBRA) and a $413 million Open Source Intelligence Enterprise (OSINT) task order for the U.S. Army. The company also completed the acquisition of SilverEdge Government Solutions in October for a net purchase price of $203 million, aimed at enhancing its portfolio of mission-focused, IP-based solutions.
Conclusion
SAIC's third-quarter results paint a picture of a company navigating some near-term revenue headwinds but demonstrating solid operational control and cost discipline. The substantial beat on adjusted earnings per share, coupled with raised full-year profit guidance and strong cash flow generation, has been rewarded by the market in early trading. The healthy book-to-bill ratio and a massive backlog provide visibility into future performance, even as the company manages through contract transitions.
For a detailed breakdown of historical earnings and future analyst estimates for SAIC, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.